Growth figures fail to spur FTSE

Sterling jumped 1% against other major currencies today after surprise growth figures fuelled hopes that the Bank of England will not need to take further emergency action to prop up the economic recovery.

The 0.8% rise in third quarter GDP, based on provisional estimates by the Office for National Statistics, was higher than the 0.4% forecast in the City beforehand.

While the pound received an immediate boost, the FTSE 100 Index failed to recover from a weak start and stood 39.7 points lower at 5712.2.

A late sell-off in New York last night and expectations for a lacklustre start later today kept London shares on the back foot. Asian markets also reflected nerves ahead of a round of quarterly results later this week from major Japanese firms including Sony and Honda.

The biggest fall in London was recorded by Cairn Energy after an update on its Greenland exploration activities disappointed investors.

Cairn stressed that its work in Greenland was at a very early stage but shares still dropped nearly 7% – off 27.1p to 384.9p – after one well encountered no oil or gas and another did not reach its target depth before the end of the Arctic drilling season.

Other top flight fallers included Arm Holdings despite better than expected third quarter profit and sales figures as it benefits from demand for its microchips in mobile phones and other gadgets.

Shares were 21.9p lower at 367.3p as analysts said the current share price reflected much of the upside in the stock.

Insurance stocks were also under pressure after a review of the sector by brokers from Bank of America prompted Legal & General to fall 2.1p to 100.7p and Prudential to drop 13p to 619p.

Outside the top flight, shares in transport group Go-Ahead were 5% higher after it reported “robust” current trading and said it had identified the successor to chief executive Keith Ludeman, who is due to retire in July. Shares rose 64p to 1337p.

Cineworld was another riser, up 5p to 213p, after it showed an improved revenues trend in its most recent trading quarter. Investment bank Evolution Securities upgraded its target price for the shares following the release.

Brit Insurance lifted 23p to 1044p after directors recommended that shareholders accept an offer worth up to £888m (€1.012bn) from private equity firms Apollo and CVC Capital Partners.